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Mears reports 14% rise in pre-tax profits but predicts margin challenge

The repairs and gas servicing firm, serving the social housing sector, made £18.81 million of pre-tax profits in 2011, compared with £16.46m the previous year.

Turnover grew from £309.1m in 2010 to £337.44m in 2011, and operating margins remained at 5.5 per cent.

The firm’s annual statement says the continuing reduction in work relating to the Decent Homes scheme will “inevitably add challenge to margin” as it is replaced by new contracts.

However, there will be “several key growth drivers” in social housing, including consolidation of the number of contractors and registered social landlords. This trend will lead to “increasing opportunities for organisations like Mears who operate at a local level but who bring the economies of a national player”, it says.

In addition, ongoing mortgage lending constraints and broader economic pressures are re-enforcing demand for affordable rented accommodation, whether in the social or private sector.

Mears will look closely at opportunities for becoming a Green Deal provider when details are finalised on the scheme to allow households to take out loans to fund energy efficiency improvements.

Mears Ltd’s parent company Mears Group also reported an increase in pre-tax profit for 2011, from £28.9m to £31.5m, with revenue up 12 per cent from £524m to £589m .

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